General market theme
Limited price action at the beginning of the week with little fresh news to attract traders’ attention while the US Dollar remains on the forefront. The US currency has enjoyed strong gains on the back of the surprisingly bullish NFP report on Friday and the outlook for the buck is looking brighter at this time while August is traditionally a good month for the US currency so we could be seeing further gains ahead. This week is kind of light in terms of fresh important news and we might need to wait until Friday’s Retail Sales report to see some volatility but in the meantime any opportunities to buy the US Dollar should be followed promptly.
Price action highlights
The Euro traded sideways during the first 24 hours of trading this week after dropping sharply lower on Friday after the release of the Non-Farm Payrolls figures. The Single currency has since been trading between the 1.1050 and 1.1100 levels with the bias having turned in favor of the Dollar after the strong labor market report as traders are warming up to the possibility of another rate hike from the Fed this year, even if it’s still hard to see something like that. The Euro should remain under pressure and an attempt to work its way towards the 1.1000 area seems the way forward this week.
The Cable extended its losses yesterday remaining under pressure from the advancing Dollar and the rate is now trading below the 1.3000 level on the back of the BoE rate cut and the strong NFP figures on Friday. The bias is to the downside at this time but given that the Pound is oversold we could see a temporary bottom around these levels, however any bounces to the upside should be treated as opportunities to sell the Pound at higher levels as the Dollar is expected to have a positive month ahead.
Focus of the day
The UK Manufacturing and Industrial Production reports along with the GDP estimate from the UK are the only noteworthy events on our calendar this morning but given the date of the survey we could see traders looking past these results altogether. The Production reports are pre-Brexit vote hence it could paint a brighter picture so we might see a limited reaction to them from traders this morning.
Economic Calendar
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